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Asset Protection


In today’s litigious society, anyone can find themselves in a situation where their assets are in danger of being seized by a creditor or someone who files suit and receives a judgment. Events such as catastrophic medical bills, a failed business, lawsuits, creditor’s claims, injury claims, and many other situations can threaten your assets. An asset protection plan can shield much of your wealth from loss. However, since the techniques used in developing such a plan are complex and must strictly adhere to estate tax and other laws, it is essential that you contact a reputable asset protection attorney. An attorney will assist you in developing an asset protection plan that effectively meets your goals.

What is an Asset Protection Plan?


Simply stated, an asset protection plan is the application of a lawful series of techniques that protect your assets from the claims of future creditors. The legal methods used are designed to insulate assets and deter potential creditors from coming after them, and frustrate such creditors if they try. When there are significant assets involved, the protection planning often consists of setting up a series of trusts, partnerships, or off-shore entities to hold legal title to the assets. The difficulty in collecting on such protected assets is usually enough to dissuade a creditor from pursing a claim.

There is, however, a fine line between legal asset protection planning and illegal transfer of assets to defraud creditors. California has adopted a Fraudulent Conveyance Act that prohibits the transfer of assets to hinder, delay or place them beyond a creditor’s reach. Such a transfer is considered a fraudulent conveyance and can be set aside by the court. It is therefore essential that you contact an experienced attorney who can help you prepare an effective and legal protection plan.

Who Needs an Asset Protection Plan?


Everyone should try to protect their assets as much as possible. However, some individuals need more protection than others. Those people might fall into any of the following categories:

  • People with substantial wealth: Those that are financially well off are usually more at risk for lawsuits than others and constitute the most common type of person that needs asset protection.
  • People with imminent financial and other difficulties: Those people that face legal, financial, or other difficulties in the near future need asset protection. Many situations can lead to a need to protect assets, such as serious illness or injury, bankruptcy, divorce, large tax bills, etc. If you think that your assets may be in danger of being taken from you, call an experienced attorney as soon as possible.
  • Professionals or those with jobs that have a high risk of lawsuits: Doctors, lawyers, accountants, pharmacists, engineers, and other professionals run the risk of malpractice lawsuits. It is therefore important to protect your assets if you are in a high-risk career, even if you have insurance.
  • Business owners: Those people that own a business should consider asset protection. Injuries on your property could lead to lawsuits and a failed business will usually bring a series of lawsuits.

Common Techniques for Asset Protection


Establishment of an asset protection plan is a highly individualized process that depends upon each client’s unique situation. A few of the most common methods of asset protection might include:

  • Offshore or foreign trusts where strict laws protect trust assets from creditors and lawsuits. Creditors usually have no avenue for recovery from a foreign trust.
  • Establishment of various business entities, such as a family limited partnership (FLP) or a limited liability company. By setting up a business in one of these ways, your personal assets can be protected from business problems and failures.
  • Other methods such as using retirement plans, gifts of property, life insurance contracts with spendthrift provisions, annuities, etc.

California Asset Protection Attorney

There are many types of asset protection methods and strategies that can be used to help you keep your assets secure. If you want to make sure that your assets are protected, it is essential that you talk to an experienced attorney as soon as possible. An experienced lawyer will work with you to design creative asset protection plans to guard against potential liability.